The city is the political unit of fantasy literature, probably because of the ostensibly medieval setting. Cities offered protection, shelter, commerce–and ideas about the countries which contained these cities were vague at best for the entry level peasant. When fantasy writers talk about worldbuilding, what they often mean is citybuilding–creating consecutive cities that might be plausibly part of the same region one after the other. But there isn’t a lot of Federalism among dwarves, if you catch my meaning. The city-state is the dominant mode, even in kingmaking dramas, where the capital is the source of power and object of urban longing towards which the kinglet travels with unrelenting focus. The epic fantasy usually bounces between several (cf. George Martin, Tolkien, et al.) with one designated as the capital and a whole lot of flyover country making up the rest of the world.